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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

xbox         QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2002

OR

box     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to ______

Commission File Number 1-3970

HARSCO CORPORATION

(Exact name of registrant as specified in its charter)
     
 Delaware   23-1483991
(State of incorporation)   (I.R.S. Employer Identification No.)
 Camp Hill, Pennsylvania   17001-8888
(Address of principal executive offices)   (Zip Code)
 Registrant’s Telephone Number   (717)763-7064

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES    xbox          NO    box

         
Title of Each Class   Outstanding Shares at July 31, 2002
 
Common Stock Par Value $1.25
     40,508,599  
Preferred Stock Purchase Rights
     40,508,599  

 

HARSCO CORPORATION AND SUBSIDIARY COMPANIES
PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)

                                     
        Three Months Ended   Six Months Ended
        June 30   June 30
       
 
    2002   2001 (1)   2002   2001 (1)
(In thousands, except per share amounts)  
 
 
 
Revenues from continuing operations:
                                
 
Service sales
   $ 335,696     $ 332,310     $ 645,571     $ 657,780  
 
Product sales
     150,919       147,854       277,227       301,054  
 
    
     
     
     
 
   
Total revenues
     486,615       480,164       922,798       958,834  
 
    
     
     
     
 
Costs and expenses from continuing operations:
                                
 
Cost of services sold
     241,922       237,635       469,109       475,278  
 
Cost of products sold
     119,367       115,372       220,083       241,268  
 
Selling, general, and administrative expenses
     75,927       72,775       149,903       148,770  
 
Research and development expenses
     708       885       1,564       1,470  
 
Other expense
     1,436       1,258       2,342       3,845  
 
    
     
     
     
 
   
Total costs and expenses
     439,360       427,925       843,001       870,631  
 
    
     
     
     
 
   
Operating income from continuing operations
     47,255       52,239       79,797       88,203  
Equity in income (loss) of affiliates, net
     85       190       290       (2,048 )
Interest income
     830       1,139       2,090       2,311  
Interest expense
     (11,086 )     (13,711 )     (22,153 )     (27,850 )
 
    
     
     
     
 
   
Income from continuing operations before income taxes and minority interest
     37,084       39,857       60,024       60,616  
Provision for income taxes
     11,395       13,950       18,465       21,239  
 
    
     
     
     
 
   
Income from continuing operations before minority interest
     25,689       25,907       41,559       39,377  
Minority interest in net income
     1,588       1,366       3,033       2,452  
 
    
     
     
     
 
Income from continuing operations
     24,101       24,541       38,526       36,925  
 
    
     
     
     
 
Discontinued operations:
                                
 
Income (loss) from operations of discontinued businesses
     415       253       (2 )     (3,234 )
 
Gain on disposal of discontinued businesses
     2,868       —       2,868       —  
 
Provision for income taxes
     (1,183 )     (89 )     (1,030 )     1,155  
 
    
     
     
     
 
Income (loss) from discontinued operations
     2,100       164       1,836       (2,079 )
 
    
     
     
     
 
   
Net Income
   $ 26,201     $ 24,705     $ 40,362     $ 34,846  
 
    
     
     
     
 
Average shares of common stock outstanding
     40,353       39,828       40,198       39,818  
Basic earnings per common share:
                                
 
Continuing operations
   $ .60     $ .62     $ .96     $ .93  
 
Discontinued operations
     .05       —       .04       (.05 )
 
    
     
     
     
 
Basic earnings per common share
   $ .65     $ .62     $ 1.00     $ .88  
 
    
     
     
     
 
Diluted average shares of common shares outstanding
     40,938       39,933       40,738       39,906  
Diluted earnings per common share:
                                
 
Continuing operations
   $ .59     $ .62     $ .95     $ .92  
 
Discontinued operations
     .05       —       .04       (.05 )
 
    
     
     
     
 
Diluted earnings per common share
   $ .64     $ .62     $ .99     $ .87  
 
    
     
     
     
 
(1)   In order to comply with the Financial Accounting Standards Board (FASB) Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” 2001 information has been reclassified for comparative purposes.

See accompanying notes to consolidated financial statements.

-2-

 

HARSCO CORPORATION AND SUBSIDIARY COMPANIES
PART I — FINANCIAL INFORMATION

CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)

                     
        June 30   December 31
(In thousands)   2002   2001 (1)
   
 
ASSETS
                
Current assets:
                
 
Cash and cash equivalents
   $ 65,615     $ 66,638  
 
Accounts receivable, net
     400,687       369,569  
 
Inventories
     170,972       165,105  
 
Other current assets
     68,663       68,046  
 
    
     
 
   
Total current assets
     705,937       669,358  
 
    
     
 
Property, plant and equipment, net
     802,608       811,274  
Goodwill, net
     363,418       353,170  
Other assets
     183,574       179,422  
Assets held for sale
     60,204       77,542  
 
    
     
 
   
Total assets
   $ 2,115,741     $ 2,090,766  
 
    
     
 
LIABILITIES
                
Current liabilities:
                
 
Short-term borrowings
   $ 35,616     $ 29,602  
 
Current maturities of long-term debt
     10,491       12,422  
 
Accounts payable
     136,817       156,739  
 
Accrued compensation
     34,067       35,726  
 
Income taxes
     24,923       35,091  
 
Dividends payable
     10,127       9,996  
 
Other current liabilities
     193,283       174,161  
 
    
     
 
   
Total current liabilities
     445,324       453,737  
 
    
     
 
Long-term debt
     690,103       720,133  
Deferred income taxes
     116,121       103,082  
Insurance liabilities
     49,383       49,019  
Other liabilities
     58,054       57,621  
Liabilities associated with held for sale assets
     16,821       21,001  
 
    
     
 
   
Total liabilities
     1,375,806       1,404,593  
 
    
     
 
COMMITMENTS and CONTINGENCIES
                
SHAREHOLDERS’ EQUITY
                
Common stock
     83,754       83,106  
Additional paid-in capital
     109,822       94,597  
Accumulated other comprehensive expense
     (117,722 )     (135,263 )
Retained earnings
     1,267,882       1,247,680  
 
    
     
 
 
     1,343,736       1,290,120  
Treasury stock
     (603,801 )     (603,947 )
 
    
     
 
   
Total shareholders’ equity
     739,935       686,173  
 
    
     
 
   
Total liabilities and shareholders’ equity
   $ 2,115,741     $ 2,090,766  
 
    
     
 

(1)   In order to comply with the Financial Accounting Standards Board (FASB) Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” 2001 information has been reclassified for comparative purposes.

See accompanying notes to consolidated financial statements.

-3-

 

HARSCO CORPORATION AND SUBSIDIARY COMPANIES
PART I — FINANCIAL INFORMATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)

                       
          Six Months Ended
          June 30
         
(In thousands)   2002   2001(1)
 
 
Cash flows from operating activities:
                
 
Net income
   $ 40,362     $ 34,846  
 
Adjustments to reconcile net income to net cash provided by operating activities:
                
   
Depreciation
     76,171       79,508  
   
Amortization
     838       8,718  
   
Equity in (income) loss of affiliates, net
     (290 )     2,048  
   
Dividends or distributions from affiliates
     144       108  
   
Other, net
     7,227       4,615  
   
Changes in assets and liabilities, net of acquisitions and dispositions of businesses:
                
     
Accounts receivable
     (18,621 )     (32,211 )
     
Inventories
     (3,744 )     (7,087 )
     
Accounts payable
     (29,115 )     (22,072 )
     
Net disbursements related to discontinued defense business
     (505 )     (468 )
     
Other assets and liabilities
     7,936       (392 )
 
    
     
 
   
Net cash provided by operating activities
     80,403       67,613  
 
    
     
 
Cash flows from investing activities:
                
 
Purchases of property, plant and equipment
     (60,020 )     (77,850 )
 
Purchase of businesses, net of cash acquired
     —       (4,880 )
 
Proceeds from sales of assets
     37,186       17,573  
 
Other investing activities
     (19 )     50  
 
    
     
 
   
Net cash (used) by investing activities
     (22,853 )     (65,107 )
 
    
     
 
Cash flows from financing activities:
                
 
Short-term borrowings, net
     520       6,891  
 
Current maturities and long-term debt:
                
     
Additions
     88,805       107,331  
     
Reductions
     (142,296 )     (90,188 )
 
Cash dividends paid on common stock
     (20,029 )     (19,109 )
 
Common stock issued-options
     13,177       659  
 
Common stock acquired for treasury
     —       (50 )
 
Other financing activities
     (3,298 )     (2,280 )
 
    
     
 
   
Net cash provided (used) by financing activities
     (63,121 )     3,254  
 
    
     
 
Effect of exchange rate changes on cash
     4,282       (5,030 )
Net (increase) decrease in cash of discontinued operations
     266       (706 )
 
    
     
 
Net increase (decrease) in cash and cash equivalents
     (1,023 )     24  
Cash and cash equivalents at beginning of period
     66,638       55,308  
 
    
     
 
Cash and cash equivalents at end of period
   $ 65,615     $ 55,332  
 
    
     
 

(1)   In order to comply with the Financial Accounting Standards Board (FASB) Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” 2001 information has been reclassified for comparative purposes.

See accompanying notes to consolidated financial statements.

-4-

 

HARSCO CORPORATION AND SUBSIDIARY COMPANIES
PART I — FINANCIAL INFORMATION

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)

                                   
      Three Months Ended   Six Months Ended
      June 30   June 30